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How Do You Change Consumer Behavior?

The Problem: How do you get consumers to change ingrained behavior? In the late 1990s, Neil Peterson, then a Los Angeles public-transportation official, was traveling in Europe when he stumbled upon a new approach to owning a car. Car sharing, which became popular on the Continent in the 1980s, was aimed at people who owned a vehicle or were thinking of buying one but were turned off by the expense and hassle of maintaining the thing full time. Under car sharing, you didn't buy a car outright; you used it as you would a time-share property, reserving blocks of time that suited your needs. If you wanted only to drive to the market, you could rent it for an hour at a time with a low mileage limit. If you wanted to take weekend jaunts, you could buy a bundle of hours with a high mileage allowance. To pick up the car, you'd travel to the closest sharing outlet (usually just a walk or short bus ride away), and when you were done, you'd drop the vehicle off there. The concept wasn't new to the U.S. A number of small nonprofits sprang up in the mid-'90s that allowed residents to use a vehicle in their community on an hourly basis. But Mr. Peterson had bigger plans: He wanted to bring car sharing to large cities, and he wanted to turn a profit. Any entrepreneur knows it's tough enough trying to start a small business selling a garden-variety product or service. So how do you change the mind-set of a country that sees automobiles as symbols of status and freedom -- where people often wear their cars like they wear their clothes? "The automobile is part of the culture here," says Mr. Peterson. "But, in general, people are moving away from an age of ownership to an age of access, meaning people want access to things but they don't want the costs involved with ownership. And we're effectively giving them that access minus the costs."

The Solution: Mr. Peterson started Flex car in Seattle in 1999 with just five vehicles. His first step, which he has repeated in other cities, was to partner with local public-transportation boards, universities and businesses to help market his program. For instance, in some cities Flex car has made deals with transit officials that let the company offer its customers passes for public buses and trains. And some employers partially subsidize Flex car memberships as a perk for their employees. Mr. Peterson's marketing tried to position car sharing as liberating, offering slogans such as "Why buy wheels when you can borrow them?" Flex cars ads also urge drivers to "Shift your thinking" about car ownership--don't look at a car as a status symbol but as a means of getting around. Don't even look at it as property, in fact; think of it more as a time-share vacation home. Car sharing "gives you a short-term relationship, kind of like getting a motel room instead of buying a house," says Michael Marsden, a professor at Eastern Kentucky University in Richmond, Ky., who teaches about American car culture. "We as Americans love our cars, but they certainly drain time and money, and this is an alternative to that." Mr. Peterson also pushed price. The average cost of owning or leasing a new car, including things such as gas, insurance, depreciation and the car payment itself, totals $625 a month, according to the American Automobile Association. The average member in a car-sharing program spends less than $100 a month on car expenses. Flex car members pay a one-time $25 membership fee. Someone needing a car only occasionally can pay as little as $10 an hour with 10 free miles, plus 35 cents each additional mile. Those needing the car more often can select from five monthly plans starting from $45, for up to five hours and 50 miles, to $725 for 100 hours and 1,000 miles. Members receive an electronic smart card that allows them to access any vehicle in the company's fleet after they've called and reserved a car. If the car that a member initially selects isn't available, he or she will have to select another car or switch to a different time slot.

But the idea of a large car-sharing program in Seattle encountered some bumps in the road. Ref Lindmark, a Seattle transportation official who helped get the Flex car program off the ground there, says the idea wasn't well received by a number of potential partners. Some rental-car companies, which he approached about starting a car-sharing program, didn't respond to requests. Some small neighborhood car-share organizations expressed their concerns that the idea just wouldn't work: Car sharing was a local, niche idea, they felt, and they didn't want to be part of a national operation. "We knew we were taking a risk," says Mr. Lindmark, outreach coordinator for the King County metro area's Car-Sharing Program in Seattle and a partner with Flex car. "But we thought wherever you have urban density, a good transit system and marketing opportunities, there's a good chance it could work." and Mr. Peterson discovered his customers weren't exactly who he expected them to be. Unlike in Europe, he found, people in the U.S. weren't necessarily interested in replacing their cars altogether, but rather in using the car-share program as a supplement to public transportation or a substitute for a second car. Also, Mr. Peterson discovered that the biggest growth came not from individuals, but from small and midsize companies that didn't want to maintain their own fleets of vehicles. Mr. Peterson quickly tailored his ad campaigns to attract more businesses as clients, as well as people looking for second cars. The work paid off. Flex car remains tiny compared with traditional rental firms, but its network has grown to 10,000 members in six states, covering such markets as Chicago, Los Angeles and Portland, Ore. It plans to expand to 30 more markets by 2008. Perhaps an even better indication of success: Other car-sharing programs have popped up since Flex car got started, including San Francisco-based City Carshare, Boston-based Zip Car and Chicago's I-Go Car.

Question:

Q.1a How do you get consumers to change ingrained behavior? Marks: 5 Words limit: 250)

Q.1 b by looking at the solution that people attach their image with their cars, so do you this this solution will help in changing this ingrained behavior? Give your opinion and provide reasoning. Marks: 5 Words limit: 250)

Q.2 SCENARIO (10 MARKS)

List 01: Factors that may contribute to the building of strong brand equity:

Product range, Relative product quality, Points of differentiation, Retailers used, Retailer prominence, CEO profile, Media, Word-of-mouth, Use of celebritys Other brand associations Visibility of the product Social media connection Social status of the product Entertainment or self-identity product Market share (extent of popularity) Perceived innovation Perceived integrity Success of new products Sales + service staff Target markets Market coverage (global?) Time in market Competitive set B2C or B2B only Social responsibility Competitors actions Employee behavior

List 02: Potential benefits that may be gained from strong brand equity:

Increased sales Price premium Customer loyalty WOM and promoters Perceived popularity and real visibility More effective social media Mainstream media attention Retailer appeal Point-of-sale merchandise uptake Supplier bargaining power Staff recruitment and retention More energetic corporate culture More skills and resources and capabilities New product success More product line extensions Easier market development Strategic alliances More efficient marketing spend Significant competitive advantage Reduces threat of new entrants Increased profits and stability of cash flows Borrowing/capital raising Stable cash flow and easier planning Economies of scale Improved price/earnings ratio

QUESTIONS

Q.2a. Looking at the two lists, do you think that there is a relationship between the two? That is, does a strength/performance in one list contribute to a better result for a similar factor in the other list? (Example, a strong brand can be built by social media, yet strong brands will generally have a greater social media presence and uptake.) Marks: 5 Words limit: 250)

Q.2b. One of the fastest growing firms, in terms of its brand equity, in recent years has been Apple. Identify the factors on both lists and has contributed to the increase in its brand equity and the benefits they have gained from this increased position in the marketplace Marks: 5 Words limit: 250)